Turkish Airlines looking at aircraft financing

Turkish Airlines confirmed on Monday it is looking at several options to finance buying additional aircraft, including leasing arrangements and possible eurobond or sukuk issues.

Bankers familiar with the negotiations told Reuters on Friday the airline was in talks with banks about a leasing arrangement worth around $500 million to help fund orders from 2014.

The airline was considering using Enhanced Equipment Trust Certificates (EETCs) for the first time – financial securities issued by banks under which the airline gets ownership of the planes when the certificates mature – the bankers said.

“Work is being conducted on different and innovative financing methods for aircraft financing, including both classic methods and capital market financing alternatives such as EETC, sukuk and eurobond,” a Turkish Airlines spokesman said.

“However no decision has been taken regarding the methods… or the amount.”

The airline said last month it had decided to buy 15 Boeing B777-300ERs by 2017, with an option to buy five more, and 15 Airbus A330-300 planes between 2014-2016.

EETC transactions, effectively a form of secured debt financing like mortgages, are often used by airlines inEurope and the United States, but are rarer elsewhere.

Aircraft leasing firm Doric Nimrod Air Finance Alpha said in June it would use EETCs worth almost $590 million to help finance the sale of four Airbus A380 planes to Emirates airline.